If a Bank Sells a $1,000 Security to the Fed

Multiple Choice

If a bank sells a $1,000 security to the Fed and the required reserve ratio is 20 percent, _____

A) the bank has $1,000 in additional reserves, of which it can lend $800.
B) the bank has $1,000 in additional reserves, of which it can lend $900.
C) the bank has lost an asset and must reduce its loans.
D) the bank has lost a liability.
E) there is no change in excess reserves, since net assets do not change.